Stateline New South Wales

The Friday Campaign Review

DEBORAH RICE: At the end of week two, the dominant themes of the election campaign are beginning to bite.

The Prime Minister has conceded today that his party's 2004 promise to keep interest rates at record lows was a mistake and Kevin Rudd has expelled a union boss from the Labor party.

Michael Brissenden reports:

(Chanting: Three more years, three more years)

MICHAEL BRISSENDEN: At the end of week two, a third of the way into the six week campaign, the senior figures in the government might well be wondering if their supporter's enthusiasm isn't perhaps a little premature.

Three more years must still seem a long way off. A wormed debate, a bad poll and some bad inflation figures have made week 2 a difficult one but there are still four weeks to go and there's plenty of fight to come.

JOE HOCKEY, WORKPLACE RELATIONS MINISTER: When it comes down to it, the Australian people will walk into the ballot box thinking about their future and the future of their families. Investing in an untried, inexperienced Labor team is not going to deliver to Australians the sort of future that they need.

MICHAEL BRISSENDEN: Surely the Liberals can't be worried about North Sydney. Joe Hockey holds it by nearly ten per cent but insiders say there are some weird things going on in New South Wales and that state is looking like one of the real trouble spots for the government.

As Joe Hockey said, one of the governments big hopes is that as the signs of economic fragility become more apparent, voters will simply be too worried about the risk of switching to Labor.

Today Mr Costello gave that idea an even bigger nudge with an interview in the Sydney Morning Herald. A tsunami is coming he says with China at its centre, that will engulf world financial markets and now is not the time for the Reserve Bank to consider lifting interest rates or for the voters to flirt with a change of government.

PETER COSTELLO, TREASURER: I think the Chinese economy will continue to grow but it won't grow in a controlled and even way. It will grow with fits and starts and there'll be great global realignments as that process takes place.

JOHN HOWARD, PRIME MINISTER: I am just asking people, do they really think that a union dominated Labor government could manage the economy better at a time of international economic turbulence than the present government who has a track record of eleven and a half years of economic success. Now that is the question that has to be asked. It is about the future, it's not about the past.

MICHAEL BRISSENDEN: The unions, the US subprime crisis, the wages explosion, the expected China turbulence that may yet be some years off and even interest rate rises, it's all in the mix in the government's warnings about Labor risk.

But the Labor leader says the past is as important as the future.

KEVIN RUDD, OPPOSITION LEADER: Mr Costello's has been Treasurer of Australia for eleven years. His responsibility is to prepare Australia for future economic challenges.

MICHAEL BRISSENDEN: And speaking of the past, in 2004, a Liberal party ad promised in writing at least, that interest rates would remain at record lows.

This morning, John Howard conceded, almost, that that was a broken promise.

JOHN HOWARD (ON 3AW): Well, interest rates are not at record lows now, I understand that.

INTERVIEWER: And your advertising promised that.

JOHN HOWARD: Well, the advertising did refer to that for two nights, I accept that.

KEVIN RUDD: So what Mr Howard is saying is that his promise at the last election on interest rates, lasted only two nights and therefore from his point of view, didn't really count. Well, a lot of Australians who voted for Mr Howard at the last election did think it counted and now they are paying the price for it with five interest rate rises on the hop.

MICHAEL BRISSENDEN: Interest rates and the threat of another rise coming when the Reserve Bank Board meets on Melbourne Cup Day have dominated the campaign this week as has the governments' relentless warning about the power of the union bosses in any Labor government.

Although the seventy per cent figure used to describe the make-up of any future Labor front bench is disputed, it's clear Labor is well aware of the potency of this attack.

Today Kevin Rudd moved to expel West Australian union boss, Joe McDonald and the star of this particular Liberal Party ad, from the Labor party. You do have to wonder why he didn't do it months ago.

The Labor campaign team can't be in any doubt that the union bosses' theme will continue. That and interest rates certainly dominated this week but today there was a move from both sides into the other big area of voter concern - climate change.

In Perth, John Howard was pledging money for research into wave power and elsewhere in the city, Kevin Rudd was promising half a billion dollars for solar panels and rain water tanks for every school in the country.

Climate change is a hot topic. Everyone agrees there's a problem. but there's one area of this debate that's hotter than any other.

KEVIN RUDD: Our policy differences with the Government on climate change are absolutely clear cut. Remember - Mr Howard's big answer on climate change is this - nuclear reactors, 25 of them around the Australian coastline.

That's the Switkowski report and Mr Switkowski has said that construction or planning of those reactors would need to begin within 12 months of an election.

JOHN HOWARD: I think we just have to be adult about this. We've heard a lot about fear campaigns in the last couple of the weeks. I mean, the greatest fear campaign running around on this issue is this nuclear fear campaign that the Labor Party is running.

I mean, how on earth you can claim to be the Prime Minister of Australia and offer a vision for the future and claim to have a vision for the future when when you're saying that under no circumstance will we look at nuclear power no matter how compelling the evidence might be as it emerges, we won't look at it.

MICHAEL BRISSENDEN: The Prime Minister says nuclear power wouldn't be feasible in Australia for at least 10 or 15 year but like the fear of unions, this is one attack that is unlikely to end soon.

The other real fear campaign the Prime Minister has on his hands at the moment is the run one running in his own seat of Bennelong just next door to Joe Hockey's.

He's back there this weekend and the polls suggest he will be there every Saturday until November 24.